With interest rates near record lows and stock market valuations
near record highs, many advisors are looking to private markets to
diversify and potentially amplify returns for their clients.
BlackRock has launched the Expected Return Analyzer, an innovative
portfolio analysis tool, to help advisors meet that need. Powered
by BlackRock’s Aladdin® technology, the Expected Return Analyzer
draws on the BlackRock Investment Institute’s proprietary Capital
Market Assumptions to show advisors how adding private markets or
other asset class exposures to their clients’ portfolios can help
meet their return targets.
The new tool is part of BlackRock’s commitment to increasing
accessibility to alternative investments and helping advisors
better understand the role alternatives can play in wealth
portfolios to address their clients’ needs.
A BlackRock study indicates that the traditional 60/40 portfolio
will not only fall short of the moderate returns of the past but
may increase investment risk as well. In fact, the study showed
that the average advisor portfolio is about 25% more volatile than
it was a year ago, even though it has retained the same 60/40
stock/bond split.1
“In today’s low rate world, there is a mismatch between
investors’ return expectations and their exposure to private
markets,” said Scott Reeder, Head of the Alternative Investment
team in BlackRock’s U.S. Wealth Advisory business. “With volatile
equity markets and bond yields near record lows, alternatives can
have an increasingly important role to play as clients look to
enhance returns, reduce risk and build portfolio resilience. We
believe that the allocation to private markets in wealth portfolios
should increase from 5% today to 20% over the next several
years.2”
Moving from Problem to Plan
Advisors can help optimize their clients’ portfolio by uploading
it into the Expected Return Analyzer. Within seconds, they can see
how the portfolio stacks up against targeted return expectations.
Based on those results and the advisors’ inputs, the tool suggests
alternative exposures that can help meet their needs based on asset
allocation, projected performance and volatility. Once a proposed
portfolio is selected, advisors can use the Expected Return
Analyzer to model how different alternative portfolio allocations
can help meet their clients’ investment goals.
The Expected Return Analyzer adds to the suite of tools found on
BlackRock’s Advisor Center, which leverages BlackRock’s portfolio
construction tools and analysis to help advisors build more
resilient portfolios. Individual investors that want to think
beyond a traditional 60/40 portfolio should contact their advisor
to learn how adding an allocation to private investments can help
their portfolio.
About BlackRock
BlackRock’s purpose is to help more and more people experience
financial well-being. As a fiduciary to investors and a leading
provider of financial technology, we help millions of people build
savings that serve them throughout their lives by making investing
easier and more affordable. For additional information on
BlackRock, please visit www.blackrock.com/corporate | Twitter:
@blackrock | LinkedIn: www.linkedin.com/company/blackrock
The Expected Return Analyzer tool is for financial professional
use only.
IMPORTANT: The projections or other information generated by
the tools regarding the likelihood of various investment outcomes
are hypothetical in nature, do not reflect actual investment
results and are not guarantees of future results. Results may vary
with each use and over time.
Investing involves risk, including possible loss of
principal.
Alternative investments may engage in speculative investment
practices which increase investment risk, can be highly illiquid,
often are not required to provide periodic prices or valuation, may
not be subject to the same regulatory requirements as mutual funds
and often employ complex tax structures. Also, some alternative
investments have experienced periods of extreme volatility.
This information should not be relied upon as research,
investment advice, or a recommendation regarding any products,
strategies, or any security in particular. This material is
strictly for illustrative, educational, or informational purposes
and is subject to change.
The tools, and any data used by the tools, are provided on an
"as-is" basis. BlackRock expressly disclaims all warranties,
express or implied, statutory or otherwise with respect to the tool
(and any data used by the tool and the results obtained from use of
the tool) including, without limitation, all warranties or
merchantability, fitness for a particular purpose or use, accuracy,
completeness, originality and/or non-infringement. In no event
shall BlackRock have any liability for any claims, damages,
obligations, liabilities or losses relating to the tool including,
without limitation, any liability for any direct, indirect,
special, incidental, punitive and/or consequential damages
(including loss of profits or principal).
Prepared by BlackRock Investments, LLC, member FINRA.
BlackRock Fund Advisors, an affiliate of BlackRock Investments,
LLC, is a registered investment adviser.
©2021 BlackRock, Inc. BLACKROCK and ALADDIN are
trademarks of BlackRock, Inc., or its subsidiaries in the United
States and elsewhere. All other marks are the property of their
respective owners.
1 Source: BlackRock, Aladdin. January 2021. Advisor Insights
Guide by BlackRock Portfolio Solutions. Study contains unique data
and insights on 20,108 advisor portfolios. 2 Source: BlackRock, “An
alternative journey.” December 2020.
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version on businesswire.com: https://www.businesswire.com/news/home/20210930005068/en/
Media Contact Paige Hofman
Paige.hofman@blackrock.com 212-810-3368
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